Despite strong rallies across the board, a closely followed trader says crypto bulls are currently overly optimistic.
The pseudonymous analyst known as Capo tells his quarter-million Twitter followers that while Bitcoin (BTC) has put in an impressive performance over the last week, BTC still hasn’t consolidated above its crucial resistance levels.
At the same time, Capo points out that volume is going down while open interest and funding are going up, suggesting that traders are putting excess leverage into the system.
“Nice push of the bulls, showing strength these past few days. However… is the bearish scenario invalidated?
Well, price broke 45k-46k, but it hasn’t consolidated above it yet and the last push had some bearish signs:
-Price up, volume down, OI down, funding up”
Capo also sees some bearishness forming in the stock market. According to him, the S&P 500 index (SPX), which is often correlated with crypto markets, is most likely on its way down.
“Also, SPX is facing major resistance with decreasing volume…
Call it denial or whatever you want, but in my opinion we are not out of the woods yet.
Bearish scenario still in play.”
Looking at the altcoin markets, Capo says that some coins are forming price action patterns that look like bear cycles of the past. He compares Shiba Inu’s (SHIB) rally and correction to the beginning of XRP’s bear market of 2018.
“Food for thought.”
The popular analyst also lays out a downward target for Ethereum (ETH). Based on Capo’s chart, he sees a price target below $1,300, or about 63% down from current prices.
At the time of writing, Bitcoin is trading at $47,364, up 15.2% in the last seven days while Ethereum is trading at $3,393, up 17.2% in the same time frame.
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